Concern for Debenhams stores in North Wales as retail giant is placed into administration

Debenhams: Concern for North Wales stores as retail giant is placed into administration

Debenhams has been placed into administration and the retailer's lenders have seized control of the company.

The department store giant - which has stores at Wrexham's Eagles Meadow, Llandudno, Chester and Cheshire Oaks - has fallen into the hands of its lenders as part of a pre-pack administration process.

Sports Direct's £150 million rescue offer for Debenhams had earlier been rejected.

The last-minute rescue package promised to underwrite a £150 million rights issue, on the condition that Mike Ashley be made chief executive of Debenhams.

In a statement to the market on Monday afternoon, Sports Direct said its proposal had been rebuffed and called for the Debenhams board and its lenders to actively engage in negotiations to save the chain.

Mr Ashley was previously given a deadline of 5pm on Monday to fulfil one of two conditions to prevent Debenhams from falling into the hands of lenders.

Over the weekend Mr Ashley tore into Debenhams executives, calling on Sunday night for the board of the struggling high street chain to be investigated, two members to undergo lie detector tests, and trading in its shares to be suspended.

Debenhams said in a statement: "The board confirms that it received a revised, highly-conditional, proposal from Sports Direct in the early hours of April 9, which indicated a willingness of Sports Direct to underwrite an equity issue of £200 million.

"The company's lenders have confirmed to the company that the proposal, on the terms set out, was not sufficient to justify an extension to the April 8 deadline.

"The company anticipates making a further announcement during the course of the day following further discussions with its lenders."

Debenhams has requested that its shares be suspended from trading with immediate effect, pending a further update.

FTI Consulting has been appointed to carry out the process but the firm insisted that stores will continue to trade as normal.

Administrators have sold the group to a newly-incorporated company controlled by Debenhams' lenders, including hedge funds thought to include Alcentra, Angelo Gordon and Silver Point Capital.

Under new ownership, Debenhams will have access to £200 million in emergency funding.

The move is expected to trigger store closures and job losses as part of a wider restructuring that will see around 50 outlets shut via a Company Voluntary Arrangement.

The widely-anticipated change of ownership means that shareholders such as Mike Ashley's Sports Direct, who holds a 30% stake, will see their investments wiped out.

Debenhams had on Tuesday rejected a separate rescue bid tabled by the billionaire tycoon.

Terry Duddy, Debenhams chairman, said: "It is disappointing to reach a conclusion that will result in no value for our equity holders.

"However, this transaction will allow Debenhams to continue trading as normal; access the funding we need; and proceed with executing our turnaround plans whilst deleveraging the group's balance sheet.

"We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.

"In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured that Debenhams will now be able to move forward on a stable footing. I would like to thank them all for their recent and continuing support."

A spokesman for the Debenhams Pension Schemes said: "Debenhams Retail Limited has been transferred to a newly-incorporated company and continues to trade and operate as normal. Members can therefore be reassured that the schemes are carrying on as usual.

"The trustees have worked with our specialist advisers throughout the process of the company's refinancing and restructuring, to ensure that members' interests are taken into account and we have consulted closely with The Pensions Regulator and the Pension Protection Fund at every stage.

"We are in the process of writing to all members with further information and we will continue to keep them informed."

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